They Were Lying to Me

continued  Another question is the potential financial obligations of John Moores. He is being sued by two different groups of Peregrine shareholders and by a liquidation trust, formed by the bankruptcy court, utilizing internal Peregrine documents. One suit is in federal court, and two are in superior court.

Last December, the judge in the federal suit dismissed most -- but not all -- the charges against Moores and other board members. But the judge said the plaintiffs could refile the suit. In doing so, the plaintiffs for the first time had access to the information that Peregrine had provided the Securities and Exchange Commission and Department of Justice in its investigations.

Those written reports indicate that the board knew the company was in trouble, "and that contradicted the public stance" of a company moving forward swiftly and confidently, says Gwendolyn R. Giblin, attorney for a San Francisco firm handling the suit. "There were definite red flags of accounting irregularities. The only way the company could be making its numbers was through accounting shenanigans."

Moores's Los Angeles- based lawyer, John Quinn, insists there are "simply no facts to support" the charges in the revised filing. After the revelations of fraud surfaced in spring of 2002, Moores returned as chairman, and the company paid law firm Latham & Watkins to do an internal probe. That firm had earlier been used by the Padres in one of its lawsuits. The study exonerated the board, notes Quinn. At the time of the Latham & Watkins study, creditors in the bankruptcy hooted that the study was just a self-serving whitewash that was depleting scarce assets. "Latham & Watkins is not in the pocket of [former] directors," bristles Quinn.

The day before last week's big ballgame, a superior court judge tentatively ruled that the fraud case against Moores and other board members could go forward, although Quinn says, "We have a chance to discuss it with the court. We hope the court will change some of the things said there."

"Normally, these things aren't even arguable; many times, there isn't even a motion to dismiss," says attorney Michael Aguirre, whose partner, Patricia A. Meyer, has been handling the case. But in cases involving "people with a lot of power, such as Ken Lay of Enron and Moores, it's a contest to see whether the legal system can treat people the same way." The judge's move is a preliminary decision, he says, but he feels the case will go forward to trial.